HENRYs: The new class of angel investor startups need to know about

South Australian based startup founder Chris Hooper sheds light on a new class of angel investor — and how to spot them.

Raising capital in Adelaide is tough enough as it is. While there’s no shortage of rich folk here, most of that capital is deployed in conservative investments. Shy of convincing those folk to part with their hard earned cash in the high risk, high reward tech startup world, there’s a new class of investors you need to learn about:

High Earning, Not Rich Yet

I was introduced to the term last year by one of our early investors Ben Longstaff, who referred to himself as a HENRY. It was a new term to him as well, but it suited his situation better than the term ‘angel investor’ did.

Angels conjure up images of retired founders or executives that have cash to splash. Not a single participant of our early stage of fundraising would fit that bill. Instead they were all in their 30s and all fully employed.

When I first started fundraising, I thought I would be getting the money from angels. Instead, the bulk of the interest came from my HENRY friends. We were friends because we were equal in ambition. The only difference is that they had chosen the corporate life instead of the startup life.

The typical HENRY has already maxed out their retirement savings plan; they’re investing but they have a discretionary pile of money that they want to punt in the startup world. They want to live the startup life but limit their downside risk.

So how do you identify a HENRY?

1. They have jobs: This is an obvious, yet important characteristic of a HENRY;

2. They are high income professionals: Think engineers, doctors, lawyers and even accountants;

3. They are 30 and above: Their 20s are dedicated to finishing college, paying student loans and climbing the corporate ladder;

4. They are at a senior level: They should have ascended the corporate ladder, usually at a pretty quick pace;

5. They live modest lifestyles: Don’t expect to see sports cars, yachts or penthouse apartments, they’re investing most of their money;

6. They don’t brag about their money: As above, don’t expect them to have an Instagram account with photos from the front of the plane or luxurious resorts; and

7. They on the fringes of the startup scene: They don’t go to every meetup, but you can be sure you’ll see them at the big conferences or startup weekends.

SmartCompany is the leading online publication in Australia for free news, information and resources catering to Australia's entrepreneurs, small and medium business owners and business managers.

Monday to Friday, SmartCompany.com.au publishes news, business trends and ideas from around the world, profiles and features, as well as all the latest business, tax, legal, marketing, politics and innovation developments occurring around the country.